2Q18 Results Conference Call
Disclaimer and Forward Looking Statement This presentation may contain forward-looking statements within the meaning of federal securities law that are subject to risks and uncertainties. These statements are only predictions based upon our current expectations and projections about possible or assumed future results of our business, financial condition, results of operations, liquidity, plans and objectives. In some cases, you can identify forward-looking statements by terminology such as “believe,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “expect,” “predict,” “potential,” “seek,” “forecast,” or the negative of these terms or other similar expressions. The forward-looking statements are based on the information currently available to us. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements, including, among others things: changes in general economic, political, governmental and business conditions globally and in Argentina, changes in inflation rates, fluctuations in the exchange rate of the peso, the level of construction generally, changes in cement demand and prices, changes in raw material and energy prices, changes in business strategy and various other factors. You should not rely upon forward-looking statements as predictions of future events. Although we believe in good faith that the expectations reflected in the forward- looking statements are reasonable, we cannot guarantee that future results, levels of activity, performance and events and circumstances reflected in the forward-looking statements will be achieved or will occur. Any or all of Loma Negra’s forward-looking statements in this release may turn out to be wrong. You should consider these forward-looking statements in light of other factors discussed under the heading “Risk Factors” in the prospectus filed with the Securities and Exchange Commission on October 31, 2017 in connection with Loma Negra’s initial public offering. Therefore, readers are cautioned not to place undue reliance on these forward-looking statements. Except as required by law, we undertake no obligation to update publicly any forward-looking statements for any reason after the date of this release to conform these statements to actual results or to changes in our expectations. Note: The Company presented some figures converted from Argentine pesos to U.S. dollars for comparison purposes. The exchange rate used to convert Pesos to U.S. dollars was the reference exchange rate (Communication “A” 3500) reported by the Central Bank for U.S. dollars. The information presented in U.S. dollars is for the convenience of the reader only. Certain figures included in this report have been subject to rounding adjustments. Accordingly, figures shown as totals in certain tables may not be arithmetic aggregations of the figures presented in previous quarters.
Loma Negra delivers solid performance in core business despite challenging macro dynamics in Argentina in 2Q18… Macro slowdown in 2Q18 drove slower demand growth in Argentina; pricing environment remains healthy Argentine cement business balanced market position and profitability delivering top line growth and EBITDA margin expansion Strong revenue and EBITDA growth. EBITDA margin affected by other segments. Peso depreciation impacts bottom line Net revenues + 37.2% to Ps.4.8 billion (US$202 million) Adjusted EBITDA +26.9% to Ps.1.2 billion (US$49 million) Net majority income -35.0% to Ps.179 million (US$8 million) Strong balance sheet with cash position of Ps.1.6 billion and a healthy Net Debt to LTM Adj. EBITDA ratio of 0.83x Expansion of L´Amalí plant on schedule
… which resulted in lower industry cement demand growth GDP Growth 1 (% ) Construction Activity 2 (YoY Growth, % ) 27.822.8 3.90 3.80 21.5 21.3 3.60 19.519.3 3.00 2.90 2.50 2.40 15.5 2.30 14.712.6 14.4 10.610.312.1 1.50 8.4 7.0 -0.30 -0.1 -1.8 -2.20 -2.60 -5.6 2013 2014 2015 2016 2017 2018e2019e2020e 2Q17 3Q17 4Q17 1Q18 Industry Cement Sales by Type 3 (% ) Monthly Industry Cement Sales 3 (YoY Growth, % ) 23.5 19.8 19.5 17.1 16.5 16.0 15.5 13.5 13.0 59% 60% 60% 11.69.8 64% 63% 63% 64% 7.5 6.8 6.2 0.7 1.8 41% 40% 40% 36% 37% 37% 36% -0.4 -4.4-3.6-6.3 2013 2014 2015 2016 2017 2Q17 2Q18 Dec'16 Jan'17 Feb'17 Mar'17 Apr'17 May'17 Jun'17 Jul'17 Aug'17 Sep'17 Oct'17 Nov'17 Dec'17 Jan'18 Feb'18 Mar'18 Apr'18 May'18 Jun'18 Jul'18 Bulk Bags (1) Source INDEC and BCRA (Argentina Central Bank) Market Expectations (REM) Survey as of July 2018 (2) Source INDEC: ISAC (Indicador Sintetico de la Actividad) (3) Based on AFCP
Loma Negra reports 37% YoY increase in revenues driven by solid growth in core cement and concrete segments Revenue Performance: Argentine cement: up 33% YoY. Healthy pricing environment despite relatively flat volumes - challenging macro conditions Paraguay cement: up 49% YoY. Guarani appreciation and better local pricing despite 2% volume decline on lower clinker inventories Concrete: up 80% YoY. Volumes up 24% and higher prices. Public infrastructure in Loma’s markets progressing Railroad: increased 25% YoY. Higher prices offset lower transported volumes Aggregates: up 6% YoY. Lower volumes and higher FOB sales Revenues ( AR$ million) Sales Volumes 2 Q1 8 2 Q1 7 % Chg. 2 Q1 8 2 Q1 7 % Chg. Cem ent, m asonry & lim e 3,503 2,626 33.4% Argentina MM Tn 1.49 1.50 -0.6% 369 247 49.2% Paraguay MM Tn 0.13 0.13 -2.4% 3 ,8 7 2 2 ,8 7 3 3 4 .8 % Cem ent, m asonry & lim e total 1 .6 1 1 .6 2 -0 .7 % Argentina: 790 438 80.3% Concrete MM m3 0.25 0.20 23.7% 485 388 24.9% Railroad MM Tn 1.16 1.23 -6.1% 69 65 6.0% Aggregates MM Tn 0.25 0.27 -7.4% Total Net Revenues 4 ,7 5 7 3 ,4 6 7 3 7 .2 %
Gross Profit up 29% SG&A as a % of revenues fell 20 bps Argentine cement gross margin expanded 88 bps to 33.4% despite relatively flat volumes Consolidated gross profit up 29% YoY, while gross margin declined 189 bps to 28.0% mainly reflecting a weaker performance in railroad and Paraguay, as well as a faster growth in lower margin concrete business Despite new expenses as public company, SG&A as a % of sales dropped 20 bps YoY, to 7.7%, driven by top line growth and lower sales tax rate Gross Profit & Margin Selling, General & Administrative AR$ Million AR$ Million Gross As a % of 7.9% 7.7% 29.9% 28.0% Margin Sales 1,331 1,035 365 273 2Q17 2Q18 2Q17 2Q18
EBITDA up 27% YoY, mainly driven by solid performance in core Argentine cement segment Argentine Cement segment Adjusted EBITDA up 36.6%, with margin expanding 60 bps to 28.0%. Argentine cement EBITDA represents 85% of consolidated figure Consolidated Adjusted EBITDA up 27% YoY in 2Q18 – Cement and Concrete lead growth Adjusted EBI TDA & Margin Consolidated Adjusted EBITDA Margin down 197 bps to 24.2% as reflecting lower profitability in Railroad and Paraguay as well as strong AR$ Million growth in the lower margin Concrete business Adjusted 24.2% 26.2% EBITDA Margin 2Q18 Adjusted EBI TDA breakdown 11% 2% Cement, masonry cement and lime— 2% Argentina 1,153 Cement—Paraguay 909 Concrete Railroad Aggregates 2Q17 2Q18 US$ million 85% 58 49 Others
Net Majority Income impacted by non-cash FX loss due to Argentine peso depreciation Positive contributors to Net Profit: Finance Costs, net AR$ Million Adjusted EBITDA increased 27% YoY Effective tax rate declined to 30.7% in 2Q18 from 32.2% in 2Q17, as a result of the tax reform at year-end 2017 671 This performance was offset by higher Total finance costs net , 292 which rose 129.3% mainly due to foreign exchange differences 2Q17 2Q18 Foreign exchange loss of Ps.515 million in 2Q18, compared to a Ps.130 million loss in 2Q17, mainly non- Net Profit Attributable to Owners cash AR$ Million Net Financial expense , decreased by Ps.7 million as a result of both higher cash balance and interest rates Net Profit Attributable to Owners of the Company in 2Q18 276 decreased 35.0% YoY in peso terms and 59.4% YoY measured 179 in US$ 2Q17 2Q18 US$ million 19 8
Healthy balance sheet and debt profile Debt by Currency Cash position of Ps.1.6 billion and total debt at Ps.5.4 billion in June’18 Net Debt at Ps.3.8 billion (US$ 131 million) at June’18 US$ 38% Net Debt/Adj. EBITDA ratio up to 0.8x in 2Q18 from 0.3x in FY17 Ps. Operating cash flow in 1H18 declined YoY. Inventories increased in level and value 22% Capital expenditures of Ps.1,334 million in 1H18 (52 % applied to expansion of production capacity in L’Amalí plant) PYG 40% Debt by Interest Rate Cash Flow Highlights Other 1 H1 8 1 H1 7 Fixed rate Floating 46% Net cash generated by operating activities 153 558 12% BADLAR Net cash used in investing activities (1,334) (689) 4% Net cash (used in) generated by financing activities (790) (417) Libor 38% Cash and cash equivalents at the end of the period 1 ,6 1 8 2 9 8
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